S&P rates Seagate notes BB+

S&P said it assigned a BB+ rating with a 3 recovery rating to Seagate HDD Cayman’s $1 billion of unsecured notes in tranches due 2029 and 2031.

The ratings are the same as S&P’s ratings on Seagate’s outstanding notes, the agency said.

“We view Seagate’s leveraged share buybacks as credit negative, though we believe it can maintain gross leverage below our 3x downgrade threshold. The company’s S&P Global Ratings-adjusted gross leverage for the trailing 12 months is 2.4x or 2.9x pro forma for the new notes’ issuance. We expect Seagate’s leverage to remain in this area for the next several quarters before falling to 2.7x in fiscal year 2022 (ending in June),” S&P said in a press release.

Proceeds will be used to fund share repurchases and for general corporate purposes.

The agency also affirmed its BB+ issuer rating for Seagate’s parent Seagate Technology plc.

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